20 March 2009

"The economy is helpful. Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be."

I think this is a very frank analysis of the problem for Microsoft: after all, who's going to pay extra money just to get the Windows logo on a netbook, when they can get the same features for less with free software...?

Well, yes, but the interesting thing is that the same logic applies to the netbook sector, so he is implicitly explaining why Windows has problems on netbooks. Windows may cost $3 in some markets, but the price differential is certainly more (albeit not $500 as for the Mac).

I don't think Apple really does consider Linux a competitor. Apple sees this as the way Linux advocates think. Linux has technical brilliance and robustness combined with the design skills of a furry-toothed nerd with a screen full of green-on-black xterms and a copy of Opera for his pr0n.

Even if we consider MS as the winner in the netbook market (they managed to lose only 20% market share), they did not make a single buck in the process...They are practically giving XP for free, which means they don't have any profit, while at the same time, their revenue from bigger laptops drop, as more people are buying netbooks instead of laptops.MS is financially bleeding on more fronts each day. When OpenOffice grabs even more market share, things are going to get ugly for MS...

Ballmer's words about Apple can certainly be turned back on Microsoft.

We can sell a PC without Microsoft Windows or Microsoft Office, with the GNU/Linux distribution of the customers choice (or what we think is best if the customer doesn't have a preference). We maintain our margin while saving the customer $300.

We do no hard sell, we simply offer Linux as an option. And in my experience, especially as Windows XP looks increasingly old and Vista remains an unmitigated failure, an increasing number of people are choosing Linux if they are given the choice.

Ballmer's remarks were about Apple, though I still think they were incorrect (Apple has fewer model choices-but compare identical configurations to PC offerings, especially at the beginning of a product cycle and they come out almost the same), but I don't see a realistic GNU/Linux paralell. MS might have had to cut profits on XP netbooks to ensnare that 90% marketshare (and ignoring netbooks was a mistake, but I'd argue if they hadn't waited 6 months to compete, netbooks would still run XP by and large and the OEM cost would be much higher than it is now), but they won't necessarily for Win 7. When given the choice of a favorably reviewed, new OS by MS or something that is $50 less and less familiar with almost no commercial software market (no iTunes is a bigger deal than you realize. People love their iTunes), most consumers will pay $50.

@Christina: I disagree with the iTunes part, as everybody I know considers it unnecessary bloatware. On the other hand, I can imagine a lot of people paying 50 € more for the familiarity alone, or because they think they HAVE to use a specific piece of software from a specific vendor because they don't know of the Free alternatives.

And when the ARM-based netbooks reach the market, Ballmer's words will really haunt him. Even if MS were to produce an ARM version of Windows, users will have to buy ported versions of the applications.

Maybe people will realize when they have to pay a second time for software they already own that proprietary software is not such a great deal. (And that's assuming MS can come up with an ARM port of Windows.)

About Me

I have been a technology journalist and consultant for 30 years, covering
the Internet since March 1994, and the free software world since 1995.

One early feature I wrote was for Wired in 1997:
The Greatest OS that (N)ever Was.
My most recent books are Rebel Code: Linux and the Open Source Revolution, and Digital Code of Life: How Bioinformatics is Revolutionizing Science, Medicine and Business.